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Michigan Consumer Confidence Rises to Highest Since July 2021 Amid Optimistic Economic Outlook

The US consumer sentiment index experienced a modest increase of 0.6 points, reaching 79.6, its highest level since July 2021, according to the University of Michigan's preliminary reading for February. This figure was marginally below the consensus expectation of 80.

The measure of expectations rose to 78.4 this month, the highest since July 2021, while the gauge for current conditions saw a slight decline to 81.5. The report also highlighted a decrease in the number of consumers who view high prices as negatively impacting their standard of living, reaching a two-year low.

Additionally, consumers expect that prices will increase at an annual rate of 3% over the next year, a slight increase from the 2.9% predicted in January.

Our Take: Considering the strength of the labor market, robust equity and housing markets, and the overall downward trend in inflation, it's understandable that consumers are feeling increasingly confident. If this confidence translates into continued strong consumer spending, it may be challenging for inflation to reach the 2% target.


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